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Submission Details
Severity: high
Valid

`TokenManager._transfer()` does not call approve correctly

Ward

Relevant GitHub Links

https://github.com/Cyfrin/2024-08-tadle/blob/04fd8634701697184a3f3a5558b41c109866e5f8/src/core/TokenManager.sol#L247

Summary

CapitalPool.approve() takes the token address as a parameter and grants allowance to TokenManager. However, within TokenManager, if the allowance is 0, the operation ICapitalPool(_capitalPoolAddr).approve(address(this)); executes but it uses its own address (TokenManager) instead of the token address.

Vulnerability Details

Below is the incorrect approve call in TokenManager._transfer();

if (
_from == _capitalPoolAddr &&
IERC20(_token).allowance(_from, address(this)) == 0x0
) {
ICapitalPool(_capitalPoolAddr).approve(address(this));
};

Impact

If CapitalPool.approve() has not been called previously (which, according to the comment in that function, is intended to be called only by TokenManager, but as a separate issue it is permissionless and allows arbitrary calls), _transfer will always revert.

Tools Used

Foundry

Recommendations

Call CapitalPool.approve() with the token address correctly;

- ICapitalPool(_capitalPoolAddr).approve(address(this));
+ ICapitalPool(_capitalPoolAddr).approve(_token);
Updates

Lead Judging Commences

0xnevi Lead Judge 12 months ago
Submission Judgement Published
Validated
Assigned finding tags:

finding-TokenManager-approve-wrong-address-input

If we consider the correct permissioned implementation for the `approve()` function within `CapitalPool.sol`, this would be a critical severity issue, because the withdrawal of funds will be permanently blocked and must be rescued by the admin via the `Rescuable.sol` contract, given it will always revert [here](https://github.com/Cyfrin/2024-08-tadle/blob/04fd8634701697184a3f3a5558b41c109866e5f8/src/core/CapitalPool.sol#L36-L38) when attempting to call a non-existent function selector `approve` within the TokenManager contract. The argument up in the air is since the approval function `approve` was made permisionless, the `if` block within the internal `_transfer()` function will never be invoked if somebody beforehand calls approval for the TokenManager for the required token, so the transfer will infact not revert when a withdrawal is invoked. I will leave open for escalation discussions, but based on my first point, I believe high severity is appropriate.

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